Inventory mix continues to shift toward trucks and large vehicles as OEMs prioritize higher margin segments, with inventories in these categories approaching pre-COVID levels. Days’ supply (DS) closed at 38, approximately 25 percent below the five-year average, consistent with the last several months of results. Outperformers, such as Michigan-based BorgWarner, have focused primarily on efficiency and growth in the electrification of their business and cite 2023 as an inflection point for the automotive supply industry.įebruary inventory levels ended at 1.74 million units, their highest level since April 2021. AFS still expects approximately 2.8 million vehicles will be cut from production plans for lack of chips in 2023, down from 4.38 million in 2022 and 10.56 million in 2021.Īutomotive suppliers largely underperformed consensus profitability targets in Q4 and FY 2022 after a difficult operating year, marred by supply volatility and record low inventory levels for automakers. The updated estimate more than triples the previous year-to-date total losses to approximately 478,000 vehicles for the region, causing manufacturers to frontload production cuts for the year. North American automakers eliminated approximately 344,000 vehicles from their 2023 worldwide production plans in March because of further escalation in the ongoing global microchip shortage, according to AutoForecast Solutions (AFS). The Department of Transportation is applying further scrutiny to Tesla’s Autopilot system as the Department of Justice investigation continues.Īdditional March insights are included below. In regulatory news, Ford and Honda have announced significant safety recalls totaling approximately 1.7 million vehicles. Cox Automotive has acquired FleetNet America to expand its service network and mobile app offering. PDF Solutions and Voltaiq are partnering to lead electric battery improvements through analytics and machine learning. In transaction news, Lithia has acquired Jardine Motors Group to officially expand into the U.K. Inventory continues to mix toward large vehicles as automakers take action to manage truck inventory. tax incentives and state grants continue to drive manufacturing investment domestically. Structured Finance & Capital Equipment ValuationĪutomotive suppliers face down another difficult year as industry macro conditions remain volatile and growing electric vehicle (EV) volumes add significant operational complexity. Portfolio Company Performance Improvement Merger, Acquisition & Divestiture Services
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